Kathmandu sales climb 13.9pc

Kathmandu Holdings says consolidated sales for the year ending July were 13.9 per cent higher at $NZ245.5 million ($197 million), but its expected earnings before interest and tax were lower than forecast.

Sales from all stores were $NZ5.5 million more than the forecast issued by the outdoor clothing and equipment retailer at the time of its initial public offering (IPO) last October.

Kathmandu said sales in New Zealand were up $NZ9 million, or 10.6 per cent from last year to $NZ94.1 million. In Australia, sales rose by 14.3 per cent to $113.3 million, and in the United Kingdom sales went up 18.6 per cent to £4.3 million ($7.5 million).

Kathmandu has opened 14 permanent new stores, four in New Zealand and 10 in Australia, in 2009-10, compared with the expected 12 stores stated previously.

“The increased sales derived from the larger than forecast number of new stores, and the operation of three short fixed term lease site stores in the second half year, both contributed to sales performance exceeding prospectus forecast in absolute terms,” the company said.

Earnings before interest and tax (EBIT) for the year, excluding the one-off $NZ16.8 million cost associated with the IPO as reported is expected to be between $NZ47 million and $NZ48 million.

The results would be about 7 to 9 per cent up on the previous year’s EBIT result, and 5 to 7 per cent below the forecast of $NZ50.6 million.

Kathmandu said the fall below the projected EBIT was because same store sales results were also lower than forecast and it spent more on advertising in the second half of the year in response to market conditions.

The company forecast gross profit margin of about 63 per cent for the year to June, below the 64 per cent prospectus forecast and the 64.4 per cent result in the previous year.

Kathmandu chief executive officer Peter Halkett said: “Throughout the final four months of the financial year, in all three countries that Kathmandu trades in, the retail environment has been very challenging, and more difficult than we experienced in the first half.

“Given the retail market conditions and a clear downturn in consumer spending we believe the level of promotional activity and our pricing strategies have been the right response for our business.”

Kathmandu said the travel and adventure market still remained highly attractive with growing rates of participation in outdoor travel and adventure activities.

“Management remain optimistic that Kathmandu’s business model and growth strategies will continue to deliver strong earnings growth, and attractive margins over the medium term.”

After the announcement, Kathmandu shares fell 9¢ to 185¢ on the New Zealand stock exchange.